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Europe: Shares steady as Deutsche Bank picks up from record lows

Wednesday, September 28, 2016 - 07:04

PHOTO: REUTERS

[LONDON] European shares edged up on Tuesday at the end of a volatile day with Deutsche Bank picking up from record lows on hopes a US demand for US$14 billion to settle claims that it missold mortgage-backed securities could be lowered.

The pan-European STOXX 600 index added 0.1 per cent as gains in consumer stocks such as Nestle were offset by weaker crude prices that weighed on oil & gas stocks, making them the top sectoral faller.

Deutsche Bank ended little changed after falling as much as 3.4 per cent earlier in the session on concerns it may need to tap investors to raise funds to pay for the mortgage case and other litigations.

Traders said the stock recovered thanks to remarks by a US Justice Department official on the possibility of lowering mortgage-related penalties for banks if they cooperated with authorities.

"No one wants to be long this name but it is also a matter of fact that the more it goes down the more the bear case for DOJ settlement starts being in the price," Mediobanca said in a note to clients.

Food giant Nestle rose 1.1 per cent following management changes announced late on Monday and a Redburn upgrade to 'buy', while other consumer stocks such as Unilever and AB Inbev were also in demand.

Among the big movers, Carnival, the world's largest cruise operator, rose 4.8 per cent, the top STOXX gainer, after Natixis raised its target price, while French telecom group Orange rose 1.7 per cent, helped by a Credit Suisse upgrade to "outperform" from "neutral".

However, broker comments hurt travel and insurance firm SAGA . Its shares fell 2.7 per cent after Canaccord Genuity cut its stance on the stock to "hold" from "buy".

Volkswagen shares slumped 2.6 per cent on reports that Germany was vetting a criminal fine that would bankrupt the firm.

Standard Charterd fell 2.5 per cent after a media report that the British bank faced a U.S. investigation into whether it failed to stop alleged misconduct at an Indonesian power plant builder.

The oil index fell 1.4 per cent, weighed down by a slump in crude prices as producing countries meeting in Algeria appeared less likely to agree on output cuts that would reduce a global glut.